Dubai court orders liquidation of firm after creditors file a claim of Dhs3.7m against it

The Dubai Commercial Court has ordered the liquidation of a company operating in the building materials trade, appointing a legal administrator to oversee the process and inventory assets, settle liabilities, and distribute any remaining funds or movable assets to creditors.

The decision came after a creditor filed a claim of Dhs3.7 million against the company, an amount 12 times its capital of Dhs300,000.

The case details reveal that the creditor sued the company, demanding its dissolution and liquidation.

The creditor argued that the company’s losses exceeded its capital, it had completely ceased operations, lacked assets to fulfill obligations to creditors, had no registered headquarters, faced multiple lawsuits, and had frozen bank accounts.

The judge appointed a specialised accounting expert, whose report confirmed the absence of audited financial statements or accounting records.

The report stated that the company’s losses reached Dhs4 million, indicating its capital had been depleted.

Additionally, the company owned no fixed or movable assets and had no active bank accounts.

Satisfied with the expert’s findings, the court ordered the company’s liquidation.

Dr Alaa Nasr, the legal representative of the claimant, noted that Decree No. 32 of 2021 on Commercial Companies outlines several conditions for dissolving a company, including: the expiration of the term specified in the contract or articles of association (unless renewed), the achievement of the purpose for which the company was established, or the depletion of all or most of its funds.